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Up and Away

Kristine Hayes, 3:08 am ET

MY HUSBAND AND I purchased a home near Phoenix, Arizona, in 2019. It was the second house we’d bought in less than a year, so we were only able to come up with a 10% down payment. That’s meant paying $70 a month for the past 30 months to cover the cost of private mortgage insurance (PMI).

With property values in the Phoenix area up 30% since 2020, I knew I should contact our mortgage company to see if we could get the PMI payment removed. I assumed an appraisal would show our home equity had increased to the point where we no longer needed to carry the coverage.

Still, I hesitated to make the phone call because I feared the entire process would be both time-consuming and costly. I expected a full appraisal to run at least $500. I also assumed that finding an appraiser and then having him or her evaluate our home, process the paperwork and report back to our mortgage lender would take months.

In December 2021, I finally contacted our mortgage company. I was directed to the PMI department and was immediately able to speak to a customer service representative. The rep told me I had two options. I could pay for a full appraisal, estimated to cost between $500 and $600. Or, for $150, I could opt to have a broker price opinion report created. This second option involved having a real estate agent evaluate photos of our home. After comparing the features of our home to those of houses in our neighborhood that had recently sold, the agent would compute our home’s estimated market value.

Within three days of my initial phone call, a mortgage company representative arrived at our doorstep. She spent no more than five minutes walking through our home snapping a few photos. Within a week, we had a full market comparison report from a real estate agent. The estimated market price for our home came in at nearly $120,000 more than what we’d paid. The mortgage company informed me two days later that our PMI payment would be removed starting February 2022.

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David Powell
David Powell
4 months ago

Kristine, do you know if this door swings just one way? If the local housing market declines enough, does the mortgage company look to restart PMI? Still totally worth it for you either way. If I held mortgage-backed bonds I’d be really curious about this.

kristinehayes2014
kristinehayes2014
4 months ago
Reply to  David Powell

That’s a great question that I don’t know the answer to. Someone who owned a house in 2007/2008 and had recently gotten rid of PMI would likely know…

Jeff Long
Jeff Long
4 months ago

I, too, learned something. Hopefully leave the payment as it was and apply that amount to principal!

Ray Holland
Ray Holland
4 months ago

Kristine, I have a daughter who is paying PMI on a mortgage that she took out 2 yrs ago. Given the housing appreciation in our area her house has significantly increased, so this might be a possible avenue for her to eliminate the PMI she is paying. Thanks for the article and tip.

kristinehayes2014
kristinehayes2014
4 months ago
Reply to  Ray Holland

I’m glad I could help. Let me know if your daughter is able to eliminate the PMI payment. I’d be willing to be that most people who purchased a home 2 or more years ago would be eligible at this point.

R Quinn
R Quinn
4 months ago

It’s amazing what you can accomplish if you keep trying. I once tried to remortgage a house for a lower interest rate but didn’t have sufficient equity. The bank wouldn’t budge.

My wife called and harassed them until they agreed to bring it up to their mortgage committee. A week late we received a letter saying our rate was being dropped by 2% – no fees, no application, no paperwork, just a lower monthly payment.

Charlie Warner Jr
Charlie Warner Jr
4 months ago

It never ceases to amaze me what you can save by simple being nice and asking…..thanks for sharing.

B Carr
B Carr
4 months ago

I’d never heard of a “broker price opinion report” so it had educational value.

kristinehayes2014
kristinehayes2014
4 months ago
Reply to  B Carr

Likewise. I had no idea there was any other option besides having a full appraisal done.

Larry Hartzke
Larry Hartzke
4 months ago

I fail to see the point of including this piece in this blog. Is there some pearl of wisdom in your good fortune?

Rick Connor
Rick Connor
4 months ago
Reply to  Larry Hartzke

I learned about an option I never knew existed. I very much appreciate the information.

kristinehayes2014
kristinehayes2014
4 months ago
Reply to  Larry Hartzke

Larry: There may be HD readers out there who may not be aware they can request early removal of their PMI payments. Since housing values have increased dramatically over the past 20 months, there may be a substantial number of people paying out premiums who don’t need to.

Larry Hartzke
Larry Hartzke
4 months ago

You’re right. That didn’t occur to me.

Mike Wyant
Mike Wyant
4 months ago
Reply to  Larry Hartzke

Yes there is. Explore all of your options.

Jonathan Clements
Admin
Jonathan Clements
4 months ago
Reply to  Larry Hartzke

Isn’t it valuable for readers to know that they can easily get private mortgage insurance removed, thereby saving themselves money?

Larry Hartzke
Larry Hartzke
4 months ago

You’re right. I hadn’t thought of that.

Bob G
Bob G
4 months ago

Definitely!

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